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Filtering for book-value discount, retained-earnings weight, and balance-sheet support surfaces companies whose price sits below book value or whose equity is built primarily from retained profits.
How to use the screener to identify balance-sheet value characteristics — book-value discount, retained-earnings weight, and equity-funding share — without claiming to detect hidden or unrecognized asset value.
The Question
How do I find companies whose balance sheet shows accounting-defined value characteristics — a price below book value, or equity built primarily through retained profits? These are structural observations about reported financial-statement ratios, not detections of hidden or unrecognized asset value. "Hidden asset value" in the Peter Lynch sense — undervalued real estate carried at historical cost, off-balance-sheet stakes, or other unrecognized worth — is not what these observations detect, and the screener cannot identify it.
The screener works at the level of reported balance-sheet ratios. It identifies companies where the price-to-book ratio is below a threshold, or where retained earnings make up a substantial share of total assets, alongside contained equity ratios and adequate liquidity. It does not assess whether assets are carried below market value or whether the balance sheet contains items the market is overlooking.
What These Observations Actually Measure
The observations here describe the relationship between reported numbers — price, book value, retained earnings, total assets, equity. They are accounting observations.
Book value is the accounting figure from the balance sheet. It includes intangibles, goodwill, and other non-cash items, and is not the same as tangible asset value or liquidation value. A price below book value means the market capitalisation is below the accounting equity figure — nothing more.
Retained-earnings weight is the share of total assets funded by accumulated retained profits rather than external financing. A high ratio describes a long history of profit retention. It does not measure asset productivity, asset quality, or whether retained profits were deployed well.
Balance-sheet support — the equity ratio (equity as a share of total capital) and the current ratio (short-term liquidity) — describes whether the balance sheet itself looks contained, not whether the underlying business is sound.
Key Observations
Below Book Value (legacy typeKey: asset-play)
What it measures: Price-to-book ratio inverted and scaled. Score is 100 when P/B is 0, 50 when P/B equals the scale midpoint, 0 when P/B reaches the scale parameter (default 2.0). Book value is the accounting figure from the balance sheet — it includes intangibles, goodwill, and other non-cash items. The observation does not detect undervalued real estate, off-balance-sheet assets, or other Lynch-style 'asset play' characteristics; the typeKey 'asset-play' is retained for DB stability but the formula is purely inverted P/B.
Data source: Current price-to-book ratio from market price and book value per share.
Retained Earnings Weight
What it measures: Retained earnings divided by total assets, scaled so a 50% retained-earnings weight maps to score 100. A high score reflects a long history of profit retention, not the presence of unrecognized or off-balance-sheet value.
Data source: Retained earnings and total assets from the most recent annual balance sheet.
Note: A second typeKey 'hidden-asset' computes the same ratio (legacy duplicate, retained for DB stability and pending cleanup). It is no longer consumed by any active interpretation.
Profitable All Years (5y)
What it measures: Binary observation — fires only if reported net income was positive in each of the last five fiscal years. Used here to confirm the earnings history that makes retained-earnings weight possible.
Data source: Annual net income for the last five fiscal years.
Equity Ratio
What it measures: Equity as a share of total capital. A higher ratio describes a balance sheet where less of the asset base is claimed by debt. This observation is used as a contained-leverage check alongside the book-value or retained-earnings observations.
Data source: Total equity and total capital from the balance sheet.
Interpretations That Emerge
Retained Earnings on the Balance Sheet
Constituent observations: Retained Earnings Weight, Profitable All Years (5y), Equity Ratio
What emerges: Retained earnings make up a substantial share of total assets, net income has been positive in each of the last five fiscal years, and the equity ratio is contained. The Profitable All Years observation is the mechanism behind the retention — earnings that were never made could not have been retained — making the three observations describe distinct dimensions rather than the same ratio twice.
Limits: The interpretation does not detect assets carried below market value, off-balance-sheet items, or undervalued real estate. Retained earnings on the balance sheet are an accounting measure of cumulative undistributed profits, not a measure of asset market value.
Below Book Value With Balance-Sheet Support
Constituent observations: Below Book Value (legacy typeKey 'asset-play'), Current Ratio, Equity Ratio
What emerges: Price trades below book value while liquidity and equity-funding ratios are adequate. The Below Book Value observation indicates the market price is below the accounting equity figure. The current ratio confirms short-term liquidity is adequate. The equity ratio confirms the asset base is not predominantly debt-funded. Together these describe a stock trading at a book-value discount with balance-sheet support — not a Graham-tradition deep-value diagnosis or a measurement of intrinsic value.
Limits: A book-value discount can persist indefinitely. The interpretation does not measure tangible or liquidation value, predict whether any discount will close, identify catalysts, or assess business viability. Stocks below book value can remain there indefinitely or be value traps.
Retained Earnings Accumulation
Constituent observations: Retained Earnings Weight, Equity Ratio, Dividend Payout to Operating Cash
What emerges: Retained earnings are a substantial share of total assets, the equity ratio is healthy, and dividend payouts are moderate. Together these describe an equity base built through profit retention over multiple reporting periods. The dividend-payout observation adds the observation that profits have been retained rather than fully distributed.
Limits: The interpretation describes equity composition only. It does not assess whether retained capital was deployed well, predict future returns, or indicate optimal dividend policy. Accumulated earnings can reflect either disciplined reinvestment or a lack of alternative uses.
Using the Screener
Below-Book-Value Screen
Select Below Book Value With Balance-Sheet Support to find stocks where price is below the accounting equity figure with adequate liquidity and a contained equity ratio. This is a book-value-discount screen against reported balance-sheet figures, not a hidden-value or intrinsic-value detection.
Retained-Earnings Screen
Select Retained Earnings on the Balance Sheet alongside Retained Earnings Accumulation to find companies whose balance sheet has been built primarily through retained profits with contained leverage and moderate payouts. The combination identifies a balance-sheet history of profit retention — not investment quality.
Boundaries
What These Observations Cannot Tell You
None of these observations detects hidden, unrecognized, or off-balance-sheet asset value. They do not identify undervalued real estate carried at historical cost, mineral rights, intellectual property worth more than book, or any other Lynch-style hidden value. The observations report the relationship between reported numbers; the underlying composition of those numbers is outside what they can answer.
Book value is an accounting figure. A price below book value can indicate the market is overlooking value, or it can indicate the market correctly anticipates that book value will be written down. The observation cannot distinguish between these.
Retained-earnings weight describes the source of equity — whether equity comes from accumulated profits or external financing. It does not assess whether retained profits were deployed well or whether the resulting equity is productive.
Balance-sheet ratios are observations about the balance sheet, not predictions about the business. A company can pass these screens and underperform; a company can fail these screens and outperform. The screener identifies the structural condition; it does not interpret it.